3.1.2 Theories of corporate strategy

Question 1

define corporate strategy

Answer 1

the plans and policies developed to meet a company’s objectives
-concerned with the range of activities the business needs to undertake in order to achieve its goals

Question 2

define distinctive capability

Answer 2

form of competitive advantage that is sustainable because it can’t be easily replicated by a competitor

Question 3

define portfolio analysis

Answer 3

a method of categorising all the products and services of a firm to decide where each fits within the strategic plans

Question 4

what are the two developments of corporate strategy?

Answer 4

Ansoffs Matrix
Porters Strategic Matrix

Question 5

what is the corporate strategy?

Answer 5

the long-term plan to achieve the aims of the entire business

Question 6

what will a successful strategy do?

Answer 6

give the firm an advantage in the competitive market place and fulfil stakeholders expectations

Question 7

define ansoffs matrix

Answer 7

A marketing planning model that helps a business determine its product and market strategy

Question 8

what does the ansoff matrix consist of?

Answer 8

Question 9

define market penetration

Answer 9

a growth strategy where a business aims to sell existing products into existing markets

Question 10

what is the aim when choosing market penetration?

Answer 10

increase market share

Question 11

what do we do in market penetration?

Answer 11

by selling more existing products to the same target customers
-get existing customers to buy more
-widen the range of existing products
-increase sales

Question 12

evaluate market penetration

Answer 12

focuses on markets and products it knows well
can exploit insights on what customers want
unlikely to need significant new market research
will the strategy allow the business to achieve its growth objectives?

Question 13

define product development

Answer 13

a growth strategy where a business aims to introduce new products into existing markets

Question 14

what comes along with product development?

Answer 14

Research and development costs of the new products

Question 15

evaluate product development

Answer 15

plays to the strengths of an established business
strong emphasis on effective market research - insight into customer needs and successful innovation
a great way of exploiting the existing customer base
being first to market is important

Question 16

define market development

Answer 16

a growth strategy where the business seeks to sell its existing products into new markets

Question 17

what approaches are taken to market development?

Answer 17

-new geographical markets
-new distribution channels
-different pricing policies to attract new customers in different segments

Question 18

evaluate market development

Answer 18

a logical strategy where existing markets are saturated or in decline
riskier than product development - particularly expansion into international markets
existing products may not suite new markets as it depends on customer needs

Question 19

define diversification

Answer 19

the growth strategy where a business markets new products in new markets

Question 20

evaulate diversification

Answer 20

risky strategy as there is no direct experience of the product or market, few economies of scale, but if successful risk is spread
-approach through innovation and R&D by developing new solutions, acquire an existing business in the market

Question 21

give advantages of the ansoff matrix

Answer 21

simple and easy to understand
allows a business to consider multiple marketing strategies to improve the business
helps analyse the different risks and levels of investment

Question 22

give some disadvantages of ansoffs matrix

Answer 22

competition and actions are ignored
ignores external influences -> use with a SWOT/PESTLE analysis
lack of cost benefit analysis
difficult to predict the impact the strategies will have

Question 23

what is the challenge facing marketing strategy?

Answer 23

to find a way of achieving a sustainable competitive advantage over the other competing products and firms in a market

Question 24

what does porters approach cover?

Answer 24

-two overall bus strategies that could be folllowed to gain competitive advantage
-differentiation and low cost being effective strats to gain a comp ad

Question 25

define competitive advantage

Answer 25

An advantage over competitors gained by offering consumers greater value, either by lower prices or adding value

Question 26

explain the porters generic strats table

Answer 26

cost differentiation Broad scope COST LEADERSHIP DIFFERENTIATION Narrow scope COST FOCUS DIFF. FOCUS

Question 27

What is meant by low cost?

Answer 27

the objective to become the lowest cost operator -involving production on a large scale -> exploit EoS`

Question 28

why is low cost a source of competitive advantage?

Answer 28

if prices are similar, low cost will enjoy highest profits & offer lowest prices -> gain market share suitable for standard products, markets w little product diff

Question 29

what are some features of low cost operators?

Answer 29

high levels of productivity and efficiency high capacity utilisation use bargaining power to negoitiate lowest prices from suppliers lean production methods

Question 30

examples of low cost operators?

Answer 30

ryanair poundland aldi

Question 31

what is meant by differentiation?

Answer 31

aim to offer a product that is distinctively diff from the comp w the customer valuing that differentiation

Question 32

how can a business achieve differentiation?

Answer 32

superior product quality branding wide distribution channels sustained promotion

Question 33

give some examples of successful diff strats

Answer 33

apple costa dyson

Question 34

what is stuck in the middle?

Answer 34

dangerous area as not either facing competitors with low cost and highly differentiated products -> suffer competitive disadvantage

Question 35

give some examples of businesses stuck in the middle?

Answer 35

WHSmiths Morrisons sony

Question 36

what is a hyrbid strategy?

Answer 36

mix of low cost and diff ex is IKEA -low prices through cost leadership differentiatrs through unique designs and targets young global middle class

Question 37

give some advantages of the porters generic strats

Answer 37

simple to pick one easy to identify where a business stands

Question 38

give some disadvantages of porters generic strats

Answer 38

not relevant in dynamic markets oversimplifies market structure not useful in crisis situation

Question 39

how can CA be achieved throufh distinctive capabilities?

Answer 39

Architecture - contracts & relationships within the organisation Reputation - links w brand image, around quality, reliability, service and prestige Innovation - sustainable CA is when a business is able to innovate by developing a new product or process

Question 40

define the boston matrix

Answer 40

is an analysis tool which enables a business to identify where they are in terms of market growtrh and market share

Question 41

what are the four categories of the boston matrix?

Answer 41

Stars Question marks Dogs Cash Cows `

Question 42

what does the boston matrix look like?

Answer 42

Low relative ms HIGH RMS High Market growth ? stars Low Market g DOGS cash cows

Question 43

what are the two exes used for boston matrix?

Answer 43

Relative market share - share in relation to competitors, measures products strength in the market Market growth - measure of market attractiveness

Question 44

what are features of stars?

Answer 44

high market growth high marketing spend positive cash flow

Question 45

what are some strategies for stars?

Answer 45

invest to sustain growth maintain or build market share create barriers to entry

Question 46

what are features of ?

Answer 46

low share of a fast growing market neg cash flow future is uncertain

Question 47

give some strats for ?

Answer 47

invest to increase MS try to build CA Build selectively and invest in the most likely stars

Question 48

what are some features of cash cows?

Answer 48

high share of a low growth market likely to be in mature stage of PLC Little potential for growth large pos cash flow

Question 49

strategies for cash cows

Answer 49

reduce investments -> maximise cf and profits use profit to invest in? and stars defend MS

Question 50

what are features of dogs?

Answer 50

products which have failed or decline phase of PLC low share of a low growth market no real potential negative cash dlow

Question 51

what is the strategy for dogs?

Answer 51

remove of market as uses up management time and reosurces

Question 52

what are some + of the boston matrix?

Answer 52

useful tool for analysing product portfolio decisions can help a business decide to invest or remove a product

Question 53

what are some - of the boston matrix?

Answer 53

only a snapshot of current position relative MS and MG are not the only dimensions important to a business

Question 54

what is a strategy?

Answer 54

long term decisions to achieve objs based on a set of principles, set by the ceo and board of directors -proactive decision making forward thinking and future planning

Question 55

what is a tactic?

Answer 55

short term response to an opp or threat in the market managerial or supervisor level supports the corp strategy reactive to compp made in isolation of the bigger picture

Question 56

ex of strategies are:

Answer 56

HR hiring new staff to improve productivity Physical - moving a factory to another location -> cost cutting finance - issueing shares to raise capital

Question 57

exs of tactics?

Answer 57

HR- hire a new network manager as old one quit Physical - moving a factory layout to accomodate a new product being manufactured Finance- Agreeing on an overdraft with the bank to cover a shortfall in a cash flow forecast